Government estimates €4.5bn cost of COVID-19 income supports

The combined cost of the income and wage supports rolled out by the government during COVID-19 is now estimated at €4.5bn over a 12-week period, according to the Department of Public Expenditure and Reform.

Some 584,000 people are now claiming the €350 weekly Pandemic Unemployment Payment for workers who lost the jobs due to the virus, with many retail and hospitality businesses forced to close and lay off staff.

The cost of the government’s COVID-19 supports could top €4.5bn. Pic: Leon Farrell/Photocall Ireland

Another 32,000 people who are claiming the €350 weekly Illness Benefit payment — people who are self-isolating are eligible for two weeks while those infected with COVID-19 can claim for a maximum of 10 weeks.

It was estimated in late March after the introduction of COVID-19 Illness Benefit and the increase of Pandemic Unemployment Payment from €203 to €350 that the schemes would cost €3.7bn for 12 weeks.

The schemes have been expanded over the past month. Pic: Sam Boal/RollingNews.ie

With the Temporary Wage Subsidy Scheme and an expected reduction in spending on Illness Benefit, the Department of Public Expenditure and Reform now estimates that it could cost €4.5bn over three months.

Conall MacCoille, chief economist at stockbrokers Davy, suggested the ‘generous’ Pandemic Unemployment Payment has given an incentive for part-time workers to leave their jobs, leading to a 25% drop in employment.

‘The surge in COVID-19 unemployment claimants to 584,000 stands out like a sore thumb, suggesting a 25% drop in Irish employment, far greater than expected in the UK or US,’ Mr MacCoille said.

Unemployment currently stands at around 16.5%. Pic: Getty

‘However, the generous terms provided, €350 per week, with no rigorous checking on whether COVID-19 claimants were previously employed or made involuntarily redundant, have created a financial incentive to leave work, particularly among the 475,000 part-time workers in 2019.’

The drop in employment in the UK and US is estimated at closer to 10% and 13%, respectively.

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